Hollywood and its Allies Press Legislators to Boost Tax Credits

“You don’t often see labor and business together on big issues, but this is one where the benefits for all of us are clear”

Hollywood and its allies made an impassioned plea for help to state lawmakers Wednesday, urging an extension and expansion of the state’s TV and film tax credit program.

TV and filmmakers, economic analysts and business and labor leaders made their case at a joint hearing at SAG-AFTRA headquarters in Los Angeles, before the state Assembly’s revenue and taxation panel and its arts, entertainment, sports, tourism and Internet media committee.

“This is California’s signature industry and we need to keep it here,” said Ruben Gonzalez, vice-president of public policy for the L.A. Chamber of Commerce. “By every measure, this program is working, but we need do even more if we want to have any hope of keeping up with competition.”

What does that boil down to?

“More money,” Gonzalez said to a round of applause in the packed room, “and stability. Businesses need certainty and a long-term commitment from the state would provide that.” The last extension was for two years, but many observers believe that a five-year plan would enable TV and filmmakers to make long-term commitments to filming in the state.

Also read: Movie Production Up 20% in L.A. Area – And It’s Not Nearly Enough

Capped at $100 million per year, California’s Film and Television Tax Credit Program lags well behind other states and countries in terms of what it can offer financially.

Currently more than 40 states and numerous other countries offer tax incentives. Proximity to Hollywood and an extensive infrastructure of vendors, crew and visual effects and post-production facilities offset that to a degree, but the state has been steadily losing production work for years.

New York’s program offers $420 million annually, lawmakers were told, while states like George and Louisiana offer incentive plans that are uncapped.

“We need to fight back,” testified Rusty Hicks, political director of the L.A. County Federation of Labor. “You don’t often see labor and business together on big issues, but this is one where the benefits for all of us are clear and situation we’re facing is critical.”

Also read: New York Post-Production Hiring Up 25% After State Increases Credits

California Film Commission Executive Director Amy Lemisch testified that since the tax incentive program was created in 2009, $600 million in incentives have been allocated so far. That has led to 51,000 jobs being created and $4.75 billion in economic activity, according to the film commission.

She pointed to last year’s Best Picture Oscar winner “Argo,” a tax credit recipient which brought more than $46 million in wages and other income to the Los Angeles area where it filmed.

The program can bring as much as a 20 percent break for feature films and 25 percent for TV projects coming in to the state. But the demand for the credits far outstrips the program’s scope and a lottery system is employed to determine who gets the help. Last year, just 34 of 380 projects that applied were granted the breaks, leaving the rest on a waiting list.

“There’s only so much we can do with this pot of money,” said Lemisch.

The state’s surging economy considerably brightens prospects for a renewal, or even an increase in the pool available for film, TV and Internet projects.

In 2012, when the $100 million program came up for a two-year renewal, the state was battling a huge deficit, and Gov. Brown’s signing of the extension was no slam-dunk. He ultimately did, and while the economic climate has improved since then, belt-tightening has been a big part of the recovery, and the governor will remain under pressure to hold the fiscal line.

Earlier this year, Assembly members Raul Bocanegra and Ian Calderon introduced Assembly Bill 3, which will serve as the vehicle to extend the program.

“This isn’t about giving Hollywood money,” Calderon said. “This is about jobs.”